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Copyright Information
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Chapter 1 What Is Economics?
Splash Screen

SECTION 1 Scarcity and the Science of Economics
CHAPTER INTRODUCTION SECTION 1 Scarcity and the Science of Economics SECTION 2 Basic Economic Concepts SECTION 3 Economic Choices and Decision Making CHAPTER SUMMARY CHAPTER ASSESSMENT Click a hyperlink to go to the corresponding section. Press the ESC key at any time to exit the presentation. Contents

Click the Speaker button to listen to Economics and You.
The study of economics will help you become a better decision maker–it helps you develop a way of thinking about how to make the best choices for you. Click the Speaker button to listen to Economics and You. Chapter Introduction 1

Chapter Objectives Section 1: Scarcity and the Science of Economics
Explain the fundamental economic problem.  Examine the three basic economic questions every society must decide. Click the mouse button or press the Space Bar to display the information. Chapter Introduction 2

Chapter Objectives Section 2: Basic Economic Concepts
Explain the relationship among scarcity, value, utility, and wealth.  Understand the circular flow of economic activity. Click the mouse button or press the Space Bar to display the information. Chapter Introduction 3

Chapter Objectives Section 3: Economic Choices and Decision Making
Analyze trade-offs and opportunity costs.  Explain decision-making strategies. Click the mouse button or press the Space Bar to display the information. Chapter Introduction 4

End of Chapter Introduction
Click the mouse button to return to the Contents slide. End of Chapter Introduction

Study Guide Main Idea Reading Strategy
Scarcity forces us to make choices. We can’t have everything we want, so we are forced to choose what we want most.  Reading Strategy Graphic Organizer As you read the section, complete a graphic organizer like the one on page 5 of your textbook by listing and describing the three economic choices every society must make. Click the mouse button or press the Space Bar to display the information. Section 1 begins on page 5 of your textbook. Section 1-1

Study Guide (cont.) Key Terms scarcity  labor  entrepreneur 
production  Gross Domestic Product (GDP) economics  need  want  factors of production  land  capital  financial capital  Click the mouse button or press the Space Bar to display the information. Section 1 begins on page 5 of your textbook. Section 1-2

Click the Speaker button to listen to the Cover Story.
Study Guide (cont.) Objectives After studying this section, you will be able to:  Explain the fundamental economic problem.  Examine the three basic economic questions every society must decide.  Applying Economic Concepts Scarcity Why is scarcity the basic economic problem that everyone faces? Click the Speaker button to listen to the Cover Story. Click the mouse button or press the Space Bar to display the information. Section 1 begins on page 5 of your textbook. Section 1-3

Introduction Do you think the study of economics is worth your time and effort?  According to a Harris poll, a huge percentage of Americans think it is.  They must know what economists know—that a basic understanding of economics can help make sense of the world around us. Click the mouse button or press the Space Bar to display the information. Section 1-4

Did You Know? We witness scarcity with each year’s “hot” new toy. Inspired by hunter President Teddy Roosevelt, Americans coveted the teddy bear in Cabbage Patch dolls were big during the 1980s, as were Tickle Me Elmos in By 1999 Game Boy’s Pokémon was the rage with a 10-cent trading card. The most-prized first-edition pocket monsters were in such short supply that they commanded from $8 to $182. Click the mouse button or press the Space Bar to display the information. Section 1-4

The Fundamental Economic Problem
Scarcity is the condition where unlimited human wants face limited resources.  Economics is the study of how people satisfy wants with scarce resources.  Needs are required for survival; wants are desired for satisfaction.  Someone has to pay for production costs, so There Is No Such Thing As A Free Lunch (TINSTAAFL). Click the mouse button or press the Space Bar to display the information. Section 1-5

Click the mouse button or press the Space Bar to display the answer.
Discussion Question Why do you think scarcity is an issue with the rich as well as the poor? It is a human trait that few people, regardless of their economic status, are satisfied with what they have. Click the mouse button or press the Space Bar to display the answer. Section 1-Assessment 1

Three Basic Questions What must we produce? Society must choose based on its need.  How should we produce it? Society must choose based on its resources.  Figure 1.1 For whom should we produce? Society must choose based on its population and other available markets. Click the mouse button or press the Space Bar to display the information. Section 1-9

Discussion Question How might the economic decisions of a mountainous island society differ from those of a mountainous landlocked society? An island society has water resources to consider and likely a more limited population. Click the mouse button or press the Space Bar to display the answer. Section 1-Assessment 1

The Factors of Production
Factors of production are resources necessary to produce what people want or need.  Land is the society’s limited natural resources—landforms, minerals, vegetation, animal life, and climate.  Capital is the means by which something is produced such as money, tools, equipment, machinery, and factories. Click the mouse button or press the Space Bar to display the information. Section 1-13

The Factors of Production (cont.)
Labor is the workers who apply their efforts, abilities, and skills to production.  Entrepreneurs are risk-takers who combine the land, labor, and capital into new products.  Production is creating goods and services—the result of land, capital, labor, and entrepreneurs. Click the mouse button or press the Space Bar to display the information. Section 1-13

The Factors of Production (cont.)
Click the mouse button or press the Space Bar to display the information. Section 1-14

Discussion Question Why are entrepreneurs an economy’s driving force? Their abilities to start new businesses and introduce new products may re-energize a sluggish economy or strengthen a successful economy. Click the mouse button or press the Space Bar to display the answer. Section 1-Assessment 1

The Scope of Economics Economics deals with the description of economic activity—Gross Domestic Product, unemployment rate, government spending, tax rates, etc.  Analysis looks at the “why” and “how” of economic activity—why prices go up and down, for example, or how taxes affect savings. Click the mouse button or press the Space Bar to display the information. Section 1-20

The Scope of Economics (cont.)
Explanation refers to how economists communicate knowledge of the economy and its activities to the society’s population.  Prediction refers to how yesterday’s and today’s economic activities advise us of potential future activity. Click the mouse button or press the Space Bar to display the information. Section 1-20

Discussion Question What makes economics a social science? Economics is a study of human behavior because it looks at the decisions people make and how they react to those decisions. Click the mouse button or press the Space Bar to display the answer. Section 1-Assessment 1

Section Assessment Main Idea Using your notes from the graphic organizer activity on page 5, explain why a society must face the choices about WHAT, HOW, and FOR WHOM to produce. Choices must be made as long as wants are greater than the resources available. Click the mouse button or press the Space Bar to display the answer. Section 1-Assessment 1

Section Assessment (cont.) Describe the fundamental economic problem. Scarcity, the condition that results from society not having enough resources to produce all the things people want, is the fundamental economic problem. Click the mouse button or press the Space Bar to display the answer. Section 1-Assessment 2

Section Assessment (cont.) List the three basic economic questions every society must answer. Every society must ask what to produce, how to produce, and for whom to produce. Click the mouse button or press the Space Bar to display the answer. Section 1-Assessment 3

Section Assessment (cont.) Describe the factors of production. The factors of production are land, capital, labor, and entrepreneurs. Click the mouse button or press the Space Bar to display the answer. Section 1-Assessment 4

Section Assessment (cont.) List the four key elements of economics. The four key elements of economics are description, analysis, explanation, and prediction. Click the mouse button or press the Space Bar to display the answer. Section 1-Assessment 5

Section Assessment (cont.)
Synthesizing Information Give an example of a supposedly “free” item that you see every day. Explain why the item is not really free by stating who or what actually pays for it. Section 1-Assessment 7

Section Close How might the element of prediction in economics be important in your lives? Section 1-Assessment 8

Click the mouse button to return to the Contents slide.
End of Section 1

An economic product is a good or service that is useful, relatively scarce, and exchangeable.  Reading Strategy Graphic Organizer As you read the section, describe three different transactions that could take place in the product market. Use a web like the one on page 12 of your textbook to help you organize your answer. Click the mouse button or press the Space Bar to display the information. Section 2 begins on page 12 of your textbook. Section 2-1

Study Guide (cont.) Key Terms economic product  market 
factor market  product market  economic growth  productivity  division of labor  specialization  human capital  economic interdependence good  consumer good  capital good  service  value  paradox of value  utility  wealth  Click the mouse button or press the Space Bar to display the information. Section 2 begins on page 12 of your textbook. Section 2-2

Study Guide (cont.) Objectives After studying this section, you will be able to:  Explain the relationship among scarcity, value, utility, and wealth.  Understand the circular flow of economic activity.  Applying Economic Concepts Specialization How does specialization increase production? Click the Speaker button to listen to the Cover Story. Click the mouse button or press the Space Bar to display the information. Section 2 begins on page 12 of your textbook. Section 2-3

Introduction Economics, like any other social science, has its own vocabulary.  To understand economics, a review of some key terms is necessary.  Fortunately, most economic terms are widely used, and many will already be familiar to you. Click the mouse button or press the Space Bar to display the information. Section 2-4

Did You Know? The 20 percent of the world’s people who live in the wealthiest nations consume 86 percent of the world’s goods and services. The 20 percent who live in the poorest nations consume just 1.3 percent. Click the mouse button or press the Space Bar to display the information. Section 2-4

Goods, Services, and Consumers
Goods are items that are economically useful or satisfy an economic want. They are tangible and can be classified as consumer/capital and durable/ nondurable.  Services are work performed for someone and are intangible.  Consumers use goods and services to satisfy wants and needs. Click the mouse button or press the Space Bar to display the information. Section 2-5

Discussion Question Why do you think the United States has been called a “society of consumption”? Answers will vary. Students should support their opinions with examples. Click the mouse button or press the Space Bar to display the answer. Section 2-Assessment 1

Value, Utility, and Wealth
Value is worth expressed in dollars and cents. Scarcity by itself is not enough to create value. For something to have value, it must also have utility.  Utility is a good’s or service’s capacity to provide satisfaction, which varies with the needs and wants of each person.  Wealth is the accumulation of goods that are tangible, scarce, useful, and transferable to another person. Wealth does not include services. Click the mouse button or press the Space Bar to display the information. Section 2-9

Discussion Question Why might a wealthy society not have as much economic staying power as another wealthy society with a highly skilled labor force? Answers will vary. Students may indicate that wealth is usually based on limited natural resources, whereas labor can produce more goods and services. Click the mouse button or press the Space Bar to display the answer. Section 2-Assessment 1

The Circular Flow of Economic Activity
Markets are locations/mechanisms for buyers and sellers to trade. They are classified as local, regional, national, global, and cyberspace.  A factor market is where people earn their incomes. Factor markets center on the four factors of production: land, capital, labor, and entrepreneurs.  A product market is where people use their income to buy from producers. Product markets center on goods and services. Click the mouse button or press the Space Bar to display the information. Section 2-13

The Circular Flow of Economic Activity (cont.)
Figure 1.3 Click the mouse button or press the Space Bar to display the information. Section 2-14

Discussion Question How are landlords a part of a factor market? They provide land or property (a factor of production) to consumers in exchange for rent money, which is the landlords’ source of income. Click the mouse button or press the Space Bar to display the answer. Section 2-Assessment 1

Productivity and Economic Growth
Productivity is a measure of the amount of output produced by the amount of inputs within a certain time. Productivity increases with efficient use of scarce resources.  Specialization and division of labor may improve productivity because they lead to more proficiency (and greater economic interdependence). Click the mouse button or press the Space Bar to display the information. Section 2-17

Productivity and Economic Growth
Investing in human capital improves productivity because when people’s skills, abilities, health, and motivation advance, productivity increases.  Economic growth depends on high productivity. Yet, an economy’s productivity may be affected by its interdependence—reliance on others and their reliance on us to provide goods and services. Click the mouse button or press the Space Bar to display the information. Section 2-17

Discussion Question How may economic interdependence be a strength of an economy? A weakness? Answers will vary. Students may indicate that the economy may gain larger, more diverse markets, leading to greater income and productivity. But the economic problems of those additional markets (customers or suppliers) may adversely affect the economy’s production output or customer base. Click the mouse button or press the Space Bar to display the answer. Section 2-Assessment 1

Section Assessment Main Idea Using your notes from the graphic organizer activity on page 12, explain the different transactions that take place in the product market. The buying and selling of goods and services, and using money from sales to produce more goods takes place in the product market. Click the mouse button or press the Space Bar to display the answer. Section 2-Assessment 1

Section Assessment (cont.) Discuss the relationship among scarcity, value, utility, and wealth. Answers will vary. Click the mouse button or press the Space Bar to display the answer. Section 2-Assessment 2

Section Assessment (cont.) Describe the circular flow of economic activity. Click the mouse button or press the Space Bar to display the answer. Section 2-Assessment 3

Section Assessment (cont.) Explain why productivity is important to economic growth. When productivity goes up, more output is produced with the same amount of inputs in the same amount of time. Click the mouse button or press the Space Bar to display the answer. Section 2-Assessment 4

Section Assessment (cont.) Making Comparisons What is the difference between a durable good and a nondurable good? A durable good lasts three or more years when used on a regular basis. A nondurable good lasts for less than three years. Click the mouse button or press the Space Bar to display the answer. Section 2-Assessment 5

Section Assessment (cont.) Drawing Conclusions In what way do businesses and households both supply and demand in the circular flow model? Businesses supply goods while demanding resources; households supply labor and income while demanding goods. Click the mouse button or press the Space Bar to display the answer. Section 2-Assessment6

Section Close Discuss ways in which your community, state, or region specializes in the goods and services it provides. Analyze and evaluate the areas these resources come from. What makes them unique? Section 2-Assessment 7

End of Section 2

Trade-offs are present whenever choices are made.  Reading Strategy Graphic Organizer As you read this section, complete a graphic organizer similar to the one on page 19 of your textbook by explaining what you need to know to become a good decision maker. Click the mouse button or press the Space Bar to display the information. Section 3 begins on page 19 of your textbook. Section 3-1

Study Guide (cont.) Key Terms trade-off  opportunity cost 
production possibilities frontier  cost-benefit analysis  free enterprise economy  standard of living Click the mouse button or press the Space Bar to display the information. Section 3 begins on page 19 of your textbook. Section 3-2

Study Guide (cont.) Objectives After studying this section, you will be able to:  Analyze trade-offs and opportunity costs.  Explain decision-making strategies.  Applying Economic Concepts Opportunity Costs How are your decisions measured in terms of opportunity costs? Click the Speaker button to listen to the Cover Story. Click the mouse button or press the Space Bar to display the information. Section 3 begins on page 19 of your textbook. Section 3-3

Introduction The process of making a choice is not always easy. 
Because resources are scarce, consumers need to make wise choices.  To become a good decision maker, you need to know how to identify the problem and then analyze your alternatives.  Finally, you have to make your choice in a way that carefully considers the costs and benefits of each possibility. Click the mouse button or press the Space Bar to display the information. Section 3-4

Did You Know? Economists reward their greatest for breakthrough discoveries. The 1999 Nobel Prize for Economics went to Robert A. Mundell, a Canadian economist at New York’s Columbia University, for his career-long work in international currency exchange rates, vital in today’s global marketplace. The prize is worth a million dollars in U.S. currency. Click the mouse button or press the Space Bar to display the information. Section 3-4

Trade-Offs and Opportunity Cost
Trade-offs are the alternative choices people face in making an economic decision. A decision-making grid lists the advantages and disadvantages of each choice.  Opportunity cost is the cost of the next best alternative among a person’s choices. The opportunity cost is the money, time, or resources a person gives up, or sacrifices, to make his final choice. Click the mouse button or press the Space Bar to display the information. Section 3-5

Trade-Offs and Opportunity Cost (cont.)
Figure 1.5 Click the mouse button or press the Space Bar to display the information. Section 3-6

Discussion Question Why do you think economists believe opportunity cost is an important factor to consider in addition to monetary cost? The money, time, or resources given up when one choice is made rather than another are just as important as the monetary cost of the choice that was made. Click the mouse button or press the Space Bar to display the answer. Section 3-Assessment 1

Production Possibilities
The production possibilities frontier diagram illustrates the concept of opportunity cost. It shows the combinations of goods and/or services that can be produced when all productive resources are used. The line on the graph represents the full potential—the frontier—when the economy employs all of these productive resources.  Identifying possible alternatives allows an economy to examine how it can best put its limited resources into production. Click the mouse button or press the Space Bar to display the information. Section 3-9

Production Possibilities (cont.)
Considering different ways to fully employ its resources allows an economy to analyze the combination of goods and services that leads to maximum output.  An economy pays a high cost if any of it resources are idle. It cannot produce on its frontier and it will fail to reach its full production potential.  Economic growth made possible by more resources, a larger labor force, or increased productivity causes a new frontier for the economy. Click the mouse button or press the Space Bar to display the information. Section 3-9

Figure 1.6 The Production Possibilities Frontier Click the mouse button or press the Space Bar to display the information. Section 3-10

Figure 1.6 The Production Possibilities Frontier Click the mouse button or press the Space Bar to display the information. Section 3-17

Discussion Question How might economic growth stimulate greater production possibilities? Answers will vary. Students may indicate that with a larger labor force, more goods and services are created; newly discovered natural resources open up new products and services. Click the mouse button or press the Space Bar to display the answer. Section 3-Assessment 1

Thinking Like an Economist
Building simple models helps economists analyze or describe actual economic situations.  Cost-benefit analysis helps economists evaluate alternatives by looking at each choice’s cost and benefit.  Taking small, incremental steps in implementing an economic decision helps economists test whether the estimated cost of the decision was correct. Click the mouse button or press the Space Bar to display the information. Section 3-19

Discussion Question What behaviors and personality traits might you observe in the most successful economists? Answers will vary. Students should support their opinions with a rationale. Click the mouse button or press the Space Bar to display the answer. Section 3-Assessment 1

The Road Ahead Studying economics will help us know how the economy works on a daily basis.  It helps us understand a free enterprise economy, where people and privately owned businesses rather than the government make the majority of the economic decisions.  The study of economics helps us to become better decision makers.  The world of economics is complex and dynamic, as is our society. Click the mouse button or press the Space Bar to display the information. Section 3-24

Discussion Question What single economic goal have you set for yourself as a result of your study of economics? Answers will vary. Students must indicate an economic goal rather than an educational goal. Click the mouse button or press the Space Bar to display the answer. Section 3-Assessment 1

Section Assessment Main Idea Using your notes from the graphic organizer activity on page 19, explain what people try to achieve when they make decisions or trade-offs. When making economic decisions, people try to get the most value for their investment, whether it be time, money, or something else. Click the mouse button or press the Space Bar to display the answer. Section 3-Assessment 1

Section Assessment (cont.) Describe the relationship between trade-offs and opportunity costs. All economic decisions involve trade-offs. The opportunity cost of a choice is the cost of the next best use of money, time, or resources. Click the mouse button or press the Space Bar to display the answer. Section 3-Assessment 2

Section Assessment (cont.) List the decision-making strategies that economists use. Economists use the circular flow diagram, production possibilities frontier, and cost-benefit analysis. Click the mouse button or press the Space Bar to display the answer. Section 3-Assessment 3

Section Assessment (cont.) Explain why the study of economics is important to the American free enterprise system. Economic issues are an important part of many political campaigns. An understanding of the issues will help a citizen decide how to vote in an election. Click the mouse button or press the Space Bar to display the answer. Section 3-Assessment 4

Section Assessment (cont.) Making Generalizations Study the decision-making grid on page 20 of your textbook. Explain the advantages of using such a grid to evaluate alternatives. Such a grid helps organize and explain the various choices when decision making. Click the mouse button or press the Space Bar to display the answer. Section 3-Assessment 6

Section Close How might the production possibilities frontier change if new technology were applied to the production of guns but not to the production of butter? Section 3-Assessment 7

End of Section 3

Section 1: Scarcity and the Science of Economics
The basic economic problem of scarcity is due to the combination of people’s seemingly unlimited wants and relatively scarce resources.  In a world of scarce resources, There Is No Such Thing As A Free Lunch (TINSTAAFL).  Because of scarcity, society has to decide WHAT, HOW, and FOR WHOM to produce.  Land, capital, labor, and entrepreneurs are the four factors of production required to produce the things that people use. Click the mouse button or press the Space Bar to display the information. Chapter Summary 1

Section 1: Scarcity and the Science of Economics (cont.)
Entrepreneurs are risk-taking individuals who go into business in order to make a profit; they organize the other factors of production.  The scope of economics deals with description, analysis, explanation, and prediction. Click the mouse button or press the Space Bar to display the information. Chapter Summary 2

Section 2: Basic Economic Concepts
Consumers use goods and services to satisfy their wants and needs.  Something has value when it has utility and is relatively scarce.  Wealth consists of products that are scarce, useful, and transferable to others, but wealth does not include services, which are intangible.  Markets link individuals and businesses in the circular flow of economic activity; the factors of production are traded in factor markets; goods and services are traded in the product markets. Click the mouse button or press the Space Bar to display the information. Chapter Summary 3

Section 2: Basic Economic Concepts (cont.)
Productivity and investments in human capital help economic growth; investments in human capital are among the most profitable of all investments.  Increases in specialization and division of labor cause more economic interdependence. Click the mouse button or press the Space Bar to display the information. Chapter Summary 4

Section 3: Economic Choices and Decision Making
The opportunity cost of doing something is the next best alternative, or trade-off, that you give up.  A decision-making grid can be used to help evaluate alternatives.  A production possibilities frontier shows the various possible combinations of output that can be produced when all resources are fully employed; production inside the frontier occurs when some resources are idle or are not being used to their maximum capability. Click the mouse button or press the Space Bar to display the information. Chapter Summary 5

Section 3: Economic Choices and Decision Making (cont.)
When economic growth takes place, the production possibilities frontier shifts outward, showing that more products are produced than before.  The economic way of thinking involves simplification with model building, cost-benefit analysis to evaluate alternatives, and incremental decision making.  The study of economics will make you a better decision maker and will help you to understand the world around you; however, the study of economics will not tell you which decisions to make. Click the mouse button or press the Space Bar to display the information. Chapter Summary 6

Section 3: Economic Choices and Decision Making (cont.)
The study of economics helps people understand how a free enterprise economy makes the WHAT, HOW, and FOR WHOM decisions. Chapter Summary 7

End of Chapter Summary

Identifying Key Terms Choose the letter of the term that best completes the following sentences. ___ Economic products designed to satisfy people’s wants and needs are called _____ . ___ The _____ of a CD player can be expressed in dollars and cents. ___ Haircuts, repairs to home appliances, and entertainment are examples of _____ . B J I A. capital goods F. human capital B. consumer goods G. opportunity cost C. consumers H. scarcity D. factors of production I. services E. utility J. value Click the mouse button or press the Space Bar to display the answer. The Chapter Assessment is on pages 28–29. Chapter Assessment 1

Identifying Key Terms (cont.) Choose the letter of the term that best completes the following sentences. ___ _____ arises because society does not have enough resources to produce all the things people would like to have. ___ The _____ of going to a football game instead of working would include the money not earned at your job. ___ _____ is the sum of the skills, abilities, health, and motivation of people. H G F A. capital goods F. human capital B. consumer goods G. opportunity cost C. consumers H. scarcity D. factors of production I. services E. utility J. value Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 2

Identifying Key Terms (cont.) Choose the letter of the term that best completes the following sentences. ___ _____ is another name for the capacity of a product to be useful. ___ The only factors of production that are themselves the result of earlier production are _____ . ___ Land, capital, labor, and entrepreneurs are _____ . ___ People who use goods and services to satisfy their wants and needs are called _____ . E A D C A. capital goods F. human capital B. consumer goods G. opportunity cost C. consumers H. scarcity D. factors of production I. services E. utility J. value Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 3

Reviewing the Facts Identify the cause of scarcity. having only limited resources to meet seemingly unlimited wants Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 4

Reviewing the Facts (cont.) List the three basic economic questions that every society must face. WHAT to produce? HOW to produce? FOR WHOM to produce? Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 5

Reviewing the Facts (cont.) Describe the factors of production required to deliver a service like education. land; land itself and natural resources; capital: school building, computers, financial capital; labor: teachers, other workers, publishers; entrepreneurs: people who devise new products and methods of delivery of educational material. Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 6

Reviewing the Facts (cont.) Explain why economics is considered a social science. It deals with people’s behavior as they cope with scarcity. Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 7

Reviewing the Facts (cont.) Describe the relationship between goods, services, and consumers. Consumers use goods and services to satisfy their wants and needs. Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 8

Reviewing the Facts (cont.) Explain why services are excluded from the measure of wealth. because they are intangible and it is difficult to measure their value accurately Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 9

Reviewing the Facts (cont.) Distinguish between product markets and factor markets. Product markets are producers offering goods and services for sale. Factor markets are productive resources being bought and sold. Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 10

Reviewing the Facts (cont.) Explain why economists argue that productivity is important. Productivity is the efficient use of productive resources. The more efficiently productive resources are used, the greater the number of goods and services that are produced. Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 11

Reviewing the Facts (cont.) Describe the nature of an opportunity cost. the cost of the next best alternative use of money, time, or resources when one choice is made rather than another Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 12

Reviewing the Facts (cont.) Identify the economic concept illustrated by the production possibilities frontier. opportunity cost Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 13

Reviewing the Facts (cont.) Describe incremental decision making. making a decision in small stages or steps so that the decision can be reversed without too much being lost Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 14

Reviewing the Facts (cont.) Explain why economic education is important. It helps people become better decision makers. Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 15

Thinking Critically Understanding Cause and Effect Suppose that Alpha, shown in Figure 1.6 on page 23, decided to produce more guns and less butter. What would Alpha have to do to make the change? What would be the opportunity cost of producing more guns? What conditions would have to be met for the new mix of guns and butter to be on the production possibilities frontier? Resources have to be shifted from guns to butter. The opportunity cost of producing more guns is the production of less butter. All of Alpha’s resources would have to be employed. Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 16

Thinking Critically (cont.) Understanding Cause and Effect Copy the two diagrams of the production possibilities frontiers shown shown on page 29 of your textbook. Then, write captions that explain what each diagram is showing. The diagram on the left shows increase in productivity/resources in gun industry; the diagram on the right shows increase in resources/ productivity in butter industry. Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 17

Applying Economic Skills Scarcity What three choices must a society make because of scarcity? WHAT to produce? HOW to produce? FOR WHOM to produce? Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 18

Applying Economic Skills (cont.) Utility How is a product’s utility related to its value? For a product to have value, it must have utility. Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 19

Applying Economic Skills (cont.) Cost-Benefit Analysis How would you apply the concept of cost-benefit analysis to the decision to finish high school? To further your education? Make a matrix listing choices and the costs and benefits (including time, money, and satisfaction) of each educational choice. Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 20

Suppose that scientists invented a car that ran efficiently on water. Explain, in terms of scarcity, how this might affect the price of water. Explain, in terms of utility, how this might affect the price of gasoline. The more water that is needed, the scarcer it becomes, and so the price of water might go up. The less gasoline that is needed, the less utility it has, and so the price of gasoline might go down. Click the mouse button or press the Space Bar to display the answer. Chapter Assessment 21

End of Chapter Assessment
Click the mouse button to return to the Contents slide. End of Chapter Assessment

Economic Concepts 1

Continued on next slide.
Focus Activity 1.1

Focus Activity 1.2

Focus Activity 2.1

Focus Activity 2.2

Focus Activity 3.1

Focus Activity 3.2

Create a television-viewing log chronicling the number and types of economics-related items presented on the nightly news. Watch national newscasts on the networks, CNN national newscasts, and local newscasts. Record the date, the subject of the item, and the length of time devoted to the item. Extra Credit Project

Explore online information about the topics introduced in this chapter.
Click on the Connect button to launch your browser and go to the Economics: Principles and Practices Web site. At this site, you will find interactive activities, current events information, and Web sites correlated with the chapters and units in the textbook. When you finish exploring, exit the browser program to return to this presentation. If you experience difficulty connecting to the Web site, manually launch your Web browser and go to Economics Online

Explore online information about the topics introduced in this chapter.
Click on the Connect button to launch your browser and go to the BusinessWeek Web site. At this site, you will find up-to-date information dealing with all aspects of economics. When you finish exploring, exit the browser program to return to this presentation. If you experience difficulty connecting to the Web site, manually launch your Web browser and go to BusinessWeek Online

Durable Goods Orders The Department of Commerce’s report on durable goods orders highlights the number of new orders placed with domestic manufacturers for good intended to last over three years. The report is divided into broad categories; these include defense, nondefense, and capital and noncapital goods. Noncapital goods are generally of the consumer spending variety and include automobiles and large appliances. Capital goods tend to be of the investment spending nature, while defense goods indicate government spending. Infobyte 1

United States Leads in Entrepreneurs Just as students in the United States participate in programs on entrepreneurship, students in other countries study the same principles. In Ireland, students aged 12 to 18 can be part of the Young Entrepreneurs Programme. The purpose of the program is to encourage students to learn about starting their own businesses. Students sometimes sell their products or services to other students and sometimes to the general public. During the 1996–1997 school year, more than 7,000 students in 250 schools took part in the program, starting about 2,300 businesses. GE 1

Wealth in Other Cultures Personal wealth has been viewed in a variety of different ways in cultures around the world. In the past, the camel, an animal indispensable for journeys across desert regions, was a highly prized possession in many Arab countries. Wealth and social standing were measured, in part, by the number of camels a person owned. GE 2

The term conspicuous consumption–which means the use of a good or service to impress others–was coined by economist and social critic Thorstein Veblen in his study The Theory of the Leisure Class (1899). FYI 2

Stock Trading One area of economic activity that computers and the Internet have revolutionized is stock trading. For certain stocks, traders no longer have to use a stockbroker to buy or sell stock. Instead, using computers, they can trade directly with one another. They also use certain software programs to help them analyze stocks. Using a number of sites on the Internet, traders can keep track of stocks as they are being bought and sold, and keep track of the buyers and sellers as well. Cybernomics 1.1

The Role of the Entrepreneur
Alexis de Tocqueville, a French traveler, wrote about his travels in the United States during the 1830s. His book, Democracy in America, a two-volume study of the American people and their institutions, is still relevant today. Read the BusinessWeek Newsclip article on page 11 of your textbook. Learn why Democracy in America is still relevant today. Continued on next slide. This feature is found on page 11 of your textbook. Click the Speaker button to listen to an audio introduction. BW Newsclip 1

Summarizing Information What are the entrepreneurial qualities of small companies? They are nimble, innovative, close to the customer, and quick to the market. Continued on next slide. Click the mouse button or press the Space Bar to display the answer. This feature is found on page 11 of your textbook. BW Newsclip 2

Finding the Main Idea What does the writer mean by “diseconomies of scale”? The writer is referring to the slowness to change and the high costs that can result when companies become too large. Click the mouse button or press the Space Bar to display the answer. This feature is found on page 11 of your textbook. BW Newsclip 3

Click on a hyperlink to choose that topic.
What Is Economics? Your Role As A Consumer Click on a hyperlink to choose that topic. NBR Contents 1

Economics and You Video 2: What Is Economics?
After viewing What Is Economics?, you should be able to:  Define economics.  Give an example of economic scarcity.  Distinguish between needs and wants.  Discuss the trade-offs involved in allocating scarce resources. Continued on next slide. Click the mouse button or press the Space Bar to display the information. NBR 1.1

Side 1 Disc 1 Chapter 2 Click the Videodisc button anytime throughout this section to play the complete video if you have a videodisc player attached to your computer. Click the Forward button to view the discussion questions and other related slides. Click inside the box to play the preview. Continued on next slide. NBR 1.2

What is economic scarcity? Economic scarcity occurs when available resources are not sufficiently abundant to satisfy the total demand for them. Side 1 Disc 1 Chapter 2 Click the mouse button or press the Space Bar to display the answer. NBR 1.3

Economics and You Video 9: Your Role As A Consumer
After viewing Your Role As A Consumer, you should be able to:  Compare and contrast disposable and discretionary income.  Identify aspects of wise consumer decision making.  Describe some federal consumer protection activities. Continued on next slide. Click the mouse button or press the Space Bar to display the information. NBR 2.1

Side 1 Disc 1 Chapter 9 Click the Videodisc button anytime throughout this section to play the complete video if you have a videodisc player attached to your computer. Click the Forward button to view the discussion questions and other related slides. Click inside the box to play the preview. Continued on next slide. NBR 2.2

What is the difference between disposable income and discretionary income? Disposable income is the money left after taxes that is spent on basics. Discretionary income is the money left over for nonessentials. Side 1 Disc 1 Chapter 9 Click the mouse button or press the Space Bar to display the answer. NBR 2.3

Sequencing and Categorizing Information
Sequencing involves placing facts in the order in which they occur. Categorizing entails organizing information into groups of related facts and ideas. Both actions help you deal with large quantities of information in an understandable way. Continued on next slide. This feature is found on page 26 of your textbook. CTS 1

Learning the Skill Look for dates or clue words that provide you with a chronological order: in 2004, the late 1990s, first, then, finally, and so on.  If the information does not happen in sequence, you may categorize it instead. To do so, look for information with similar characteristics.  List these characteristics, or categories, as the headings on a chart. Continued on next slide. Click the mouse button or press the Space Bar to display the information. This feature is found on page 26 of your textbook. CTS 2

Learning the Skill (cont.) As you read, fill in details under the proper category on the chart. Continued on next slide. This feature is found on page 26 of your textbook. CTS 3

Practicing the Skill Read the excerpts on page 26 of your textbook, compare the information they contain, then answer the questions on the following slides. Continued on next slide. This feature is found on page 26 of your textbook. CTS 4

Which passage’s information can be organized sequentially? List the main ideas in chronological order. Excerpt A; the U.S. dominated the world steel market (1950s, 1960s), foreign competition cut into U.S. dominance (1980s), U.S. steel production improved (1990), work-hours required to produce a ton of steel dropped in the U.S. (1990), beginning in 1947 trade agreements protected U.S. jobs. Continued on next slide. Click the mouse button or press the Space Bar to display the answer. This feature is found on page 26 of your textbook. CTS 5

What categories can you use to organize the information in the other excerpt? Answers will vary. Click the mouse button or press the Space Bar to display the answer. This feature is found on page 26 of your textbook. CTS 6

This feature is found on page 18 of your textbook.
Adam Smith 1723–1790 Click the picture to learn more about Adam Smith. Be prepared to answer the questions that appear on the next two slides. Continued on next slide. This feature is found on page 18 of your textbook. Profiles in Economics 1.1

Adam Smith 1723–1790 Summarizing Ideas Summarize Smith’s contribution to economic thought. Answers will vary. Continued on next slide. Click the mouse button or press the Space Bar to display the answer. This feature is found on page 18 of your textbook. Profiles in Economics 1.2

Adam Smith 1723–1790 Synthesizing Information Explain how Smith’s ideas are evident in the workings of the American economy. The United States has a market economy, composed of a myriad of small markets, each of which operates essentially in the way Smith described; buyers and sellers operate in their own best interests. Click the mouse button or press the Space Bar to display the answer. This feature is found on page 18 of your textbook. Profiles in Economics 1.3

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